Romneycare faces financial meltdown

'At some point you run out of other people's money to spend on your promises'

According to several insurance and public-policy analysts, Massachusetts’ much heralded health-insurance reform plan, labeled “Romneycare” by its critics, is facing a potential financial crisis and may have to be scaled back.

A senior analyst at a Virginia-based think tank that has monitored Massachusetts’ health care system says that Gov. Deval Patrick will have to take the budget-cutting axe to the program because of a major stress on the state health-care system.

Citizens Council on Health Freedom President Twila Brase says the stress on the system is no surprise.

“With the economic downturn, what is happening is that people are losing their jobs or that their employers have decided that one of the ways to cut their own costs is to eliminate their employer-sponsored coverage,” Brase told WND. “So either of those could put more people into the category of getting subsidies.”

The economic downturn and the Massachusetts individual mandate have led to huge spending increases in Massachusetts state-funded insurance programs.

According to Patrick’s fiscal year 2011 budget summary, MassHealth program spending is projected at $9.8 billion, which is $601 million, or 6.5 percent, above last year’s projected spending of $9.2 billion.

The program is also estimating that more people will be enrolled: The 2011 budget projection assumes coverage of 1.26 million MassHealth members , a 3-percent increase from last year’s projected caseload.

Brase said the individual mandate from former Massachusetts Gov. Mitt Romney’s program is directly connected to the present situation. She recalled that former Massachusetts State Treasurer Tim Cahill issued a warning about the program being used as a model for Obamacare.

“I know that prior to Obamacare being passed, the state treasurer of Massachusetts had put out some kind of letter talking about the fact that he thought Obamacare would be a problem,” Brase said, “because already 68 or 69 percent of the residents of Massachusetts were subsidized in some manner.”

Brase was referring to Cahill’s letter stating, “If the federal plan is the Massachusetts plan writ large, then we should stop it, because we’re going to be in the same place four or five years down the road.”

The think-tank analyst – a Massachusetts resident who asked not to be named for security reasons – said the need for increased funding is directly related to cost increases.

Lischko documents a nearly $1 million increase in administrative costs in both Commonwealth Care and Commonwealth Choice programs in the five months from December 2009 to May 2010. During the same five-month period, investment income for the two programs declined.

The changes were for only two of the state’s insurance programs and were for only a five-month period.

Brase said she’s not surprised because she’s already seen reports that the system is broken and losing ground.

“I saw in the Boston Herald a report by the Beacon Hill Institute, a Massachusetts outfit, that says Romneycare has already cost Massachusetts 18,000 jobs and has increased health insurance costs by over $4.3 billion,” Brase said.

“There’s a high rise in costs as a result of Romneycare,” she added, “so I think they may or may not be willing to admit it, or it will be cleverly couched, but at some point you run out of other people’s money to spend on whatever your promises are.”

Brase also believes that not only are Massachusetts residents paying more than they bargained for, but they’re also getting less return for their money.

“It sounds like they’ll actually have to cut back on the program,” she said. “The other thing I know about Massachusetts is that doctors have been leaving the state. … There’s been an exodus of doctors, which means that there is decreased access to care for all the patients who thought they were going to be guaranteed coverage.

“They may get coverage, but will they get access to care? Who is going to take care of them once they get access to coverage?” Brase asked.

Brase said that in an economic downturn, demand for the subsidized insurance program only grows, further stressing the system.

“In an extended recession or an extended downturn, more people are going to go after the subsidies. And of course, if they have an individual mandate, it also means that all comers must be taken into insurance plans, so everybody that can goes for the subsidies,” Brase said.

The analyst said the stress is most evident in the backlog of applications. The analyst reports that a MassHealth employee in the Boston main office told her a “massive backlog” in processing applications for health care and renewals has been underway for over a year.

“Despite the time that has lapsed, they are not making headway at reducing the backlog,” the analyst said. “Large numbers of people are finding that for months and months they cannot reach the regional departments by phone where their paperwork is processed.”

“People who finally succeed have only done so because of perseverance and relentless attempts over a period of time,” the analyst said.

Brase added that any backlog is a logical consequence of a mandated system.

“When you have a mandate like that and you do not have the bureaucracy big enough to handle the potential requests for the service you have offered,” Brase reasoned, “then it’s just another instance where there is a promise of coverage without a guarantee of access.”

She added: “If there is a one-year backlog, [you’ve] promised people they’re going to have care and they’re going to have insurance to pay for it, but they don’t have any idea of how long they’re going to be waiting before they can actually get this access.”

Brase said consumers are further caught in the middle, because there will be no option to go to another health exchange.